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Appellate court divided over trust liability

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The Indiana Court of Appeals split Monday in a probate suit involving whether trustees failed to distribute a portion of the trust corpus in a timely manner. The majority upheld finding the trustees liable, but ordered a re-evaluation of compensatory damages and attorney fees.

Brothers Harrison “Nick” Eiteljorg II and Jack Eiteljorg were the remainder beneficiaries of a trust their father set up effective upon his death in 1997. Their mother, Sonja, was designated sole beneficiary; she died in 2003. Nick, his stepson Roger, and accountant John Lienhart were co-trustees of the trust.

In October 2004, the parties met to discuss the distribution of trust property, which consisted of $6.5 million, including $3.2 million in liquid assets. Nick wanted he and his brother to receive $2 million total, but Lienhart disagreed because he was worried about any remaining estate tax that may be owed. Roger and Lienhart suggested distributing only $1 million total, which Nick rejected and later stormed out. The dispute led to a petition to probate court to remove Lienhart and Roger as trustees. Nick and Jack filed notice raising 13 claims of breach of trust, but Judge Charles Dieter only found they breached two duties and ordered immediate distribution of $1.5 million, which included about $300,000 in non-liquid assets, to Nick and Jack.

Judge Dieter died before he could rule on the issue of damages, so Judge Tanya Walton Pratt concluded that the relevant damages period lasted from October 2004 to October 2007 when the trust was wrapped up. She awarded Nick more than $150,000 representing lost earnings from an investment opportunity and awarded Jack more than $110,000 in lost profits from his missed real estate deal. She also awarded them more than $353,000 in attorney fees.

In In the Matter of the Trust of Harrison Eiteljorg, No. 49A02-1005-TR-485, Judges Nancy Vaidik and Michael Barnes upheld Judge Dieter’s finding that John and Roger breached their duty to administer the trust according to its terms, but they found Judge Pratt erred in her assessment of damages. They should not have been allowed to recover damages for their lost investment opportunities under Indiana Code 30-4-3-11(b)(3) because that section applies to profits lost to the trust corpus due to a trustee’s misuse, not to allow beneficiaries to recover for individual profits they would have allegedly generated on their personal shares but for the trustee’s failure to timely distribute, wrote Judge Vaidik. The issue here is more like a claim for conversion.

Nick and Jack were deprived of the $1.2 million ordered by Judge Deiter for only 9 months, so they are only entitled to interest for those months. Any assessment of compensatory damages beyond that point is erroneous, she wrote. The majority also reduced the attorney fees to $150,000 based on the record.

Judge John Baker dissented on the issue of whether Lienhart and Roger committed a breach of the trust. He noted that Nick originally rejected Lienhart and Roger’s distribution proposal. Lienhart had many years of experience as an accountant and believed that the $2 million he wanted to hold back for taxes was appropriate. When the dispute arose, Lienhart and Roger petitioned for instructions from the probate court, and once instructed, they immediately made the distributions as ordered.  

“In my view, to penalize John and Roger for doing that which we consistently direct trustees to do — and which they are statutorily entitled to do — is misguided and contrary to law,” he wrote.

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  1. Perhaps the lady chief justice, or lady appellate court chief judge, or one of the many female federal court judges in Ind could lead this discussion of gender disparity? THINK WITH ME .... any real examples of race or gender bias reported on this ezine? But think about ADA cases ... hmmmm ... could it be that the ISC actually needs to tighten its ADA function instead? Let's ask me or Attorney Straw. And how about religion? Remember it, it used to be right up there with race, and actually more protected than gender. Used to be. Patrick J Buchanan observes: " After World War II, our judicial dictatorship began a purge of public manifestations of the “Christian nation” Harry Truman said we were. In 2009, Barack Obama retorted, “We do not consider ourselves to be a Christian nation.” Secularism had been enthroned as our established religion, with only the most feeble of protests." http://www.wnd.com/2017/02/is-secession-a-solution-to-cultural-war/#q3yVdhxDVMMxiCmy.99 I could link to any of my supreme court filings here, but have done that more than enough. My case is an exclamation mark on what PJB writes. BUT not in ISC, where the progressives obsess on race and gender .... despite a lack of predicate acts in the past decade. Interested in reading more on this subject? Search for "Florida" on this ezine.

  2. Great questions to six jurists. The legislature should open a probe to investigate possible government corruption. Cj rush has shown courage as has justice Steven David. Who stands with them?

  3. The is an unsigned editorial masquerading as a news story. Almost everyone quoted was biased in favor of letting all illegal immigrants remain in the U.S. (Ignoring that Obama deported 3.5 million in 8 years). For some reason Obama enforcing part of the immigration laws was O.K. but Trump enforcing additional parts is terrible. I have listed to press conferences and explanations of the Homeland Security memos and I gather from them that less than 1 million will be targeted for deportation, the "dreamers" will be left alone and illegals arriving in the last two years -- especially those arriving very recently -- will be subject to deportation but after the criminals. This will not substantially affect the GDP negatively, especially as it will take place over a number of years. I personally think this is a rational approach to the illegal immigration problem. It may cause Congress to finally pass new immigration laws rationalizing the whole immigration situation.

  4. Mr. Straw, I hope you prevail in the fight. Please show us fellow American's that there is a way to fight the corrupted justice system and make them an example that you and others will not be treated unfairly. I hope you the best and good luck....

  5. @ President Snow - Nah, why try to fix something that ain't broken??? You do make an excellent point. I am sure some Mickey or Minnie Mouse will take Ruckers seat, I wonder how his retirement planning is coming along???

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